Eric is considering an investment that will pay $5,000 a year for seven years, starting one year from today. How much should she
1 answer:
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Answer:
The answer is 150 gallons
Explanation:
First we will write out the relevant information in the question that will help us with our calculation:
Safety stock = 50 gallons
50 gallons = 9% stockout risk
??? gallons = 3% stockout risk
Next, you have to understand that the relationship between the safety stock and stockout risk is an inverse proportion. This means that the bigger the safetystock amount, the smaller the stockout risk, and vice versa. Therefore, there will be a lesser risk of running out of stock, as the safety stock amount increases.
Let g be the safety stock
Let r be the stockout risk
This relationship is represented as:
where k = a constant relating the safety stock and stockout risk.
Therefore :
where:
g₁ = 50 gallons
r₁ = 9%
r₂ = 3%
g₂ = ????
Therefore, making g₂ the subject of the formula:
Therefore, the saftey stock that would provide a stockout risk of 3% = 150 gallons.
Answer:
7.76%
Explanation:
In this question, we use the PMT formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $969
Future value = $1,000
Rate of interest = 8.1%
NPER = 17 years
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, The PMT would be $77.58
The coupon rate is shown below:
= (Coupon payment ÷ par value) × 100
= ($77.58 ÷ $1,000) × 100
= 7.76%
